What is an experience?
Experience period is a time period used to calculate the insurance premium. When the insurance adjuster prepares a premium rate for the customer, it refers to the history of the customer during his unique period of experience to evaluate the risk and return. Although this period may differ from society to society, it has generally referred to the last three fiscal years, except for the year that has just ended. For example, experience for customer experience with policy coverage from 1 January 2010 to 31 December 2011 ranges from 1 January 2006 to 31 December 2008. New companies will generally have no experience or history to evaluate to use other methods to determine its bonus. These experts collect data from the customer's experience, then use them to calculate the experiential treatment plant. This number reflects the expected loss of the customer compared to its actual losses during this period. Using a factor of adjusting experience to standard bonuses insurance companyThe company can adapt the insurance premium based on the individual risk of each client.
In determining premium costs, only the events that have occurred during experience are considered. Previous events are no longer included and the events that occurred during the year immediately before the current are considered too new or unofficial to be included. This explains why the accident affects the cost of an individual's insurance for three years, then "falls off" or expires after this time.
In general, customers who are the lowest risk based on their experience events will have the lowest premiums. Those who pose a higher risk to the insurance broker are charged more. The new Firms will not have experience in analysis, which represents an unknown entity for the insurance company. In this type of application, the broker estimates the bonus based on rates provided by similar clientsm. Usually new customers pay more than existing companies due to their unknown risk factors.
Experience period can be used to determine premiums on almost any type of insurance market. This period of time affects enterprises when purchasing compensation of workers and coverage of general responsibility. It also affects individuals who buy real estate or household insurance, automatic coverage or even certain types of health insurance.